0 XP   0   0   0

Secured vs unsecured bonds and maturity date

A bond can either be secured or unsecured. A secured bond means that there is collateral to backup the loan. This principle also applies to loans like:

  • Personal loans
  • Mortgages

Quest: Collateral

What is the collateral of the bank when they issue a mortgage?

Reward:  +10 XP  0   0   0

11.1 Maturity date of bonds

Bonds have a maturity date. You can compare this with your mortgage if you have one. After x amount of years (usually 30) your mortgage payment is completed. You no longer have to pay a mortgage and you own your house 100%. The mortgage stops to exist. The same thing applies to bonds. When a bond matures, it reaches the end of its lifetime. You stop receiving interest and get paid the par value of the bond. The par value is the amount of money the issuer (company or government) agrees to repay the investor when the bond reaches its maturity date. More on this in the next chapter.

Bond owners also have certain rights:

Feature / rights Common stock Preferred stock Bonds
Voting rights Yes No No
Dividends Variable amount Fixed amount No (interest)
Dividend payment order Last First x
Claim on leftovers after liquidation Last  Second Last First and last*
Call Option No Yes Yes
Maturity date x x Depends on the bond

* Secured bond holders are first in line, unsecured bond holders last

When you buy secured bonds, the value of the bond is backed up with collateral from the company or government. But that does not mean your bonds can’t become worthless on the market. The only guarantee you have is that your annual interest payments are made and you’ll receive the par value back at the end of the maturity (in case of a secured bond). If bond prices collapse because of a big rise in market interest, not even a secured bond will protect against that.

In the next chapter we'll take a look at how bonds operate and why market interest rate is very important. 

Comments

Join the conversation.

Leave a comment

Stay informed with my latest content.

Subscribe to my newsletter and receive an email as soon as I add content to PenkeTrading.com.


By clicking Register, you agree to the General Terms and Conditions.
Penke's Market Notifications
6LLN.F
now

I found you a STOCH Bullish Hidden Divergence on the daily chart of 6LLN.F.

6LLN.F Daily Candlestick Chart
4R6.F
4 minutes ago

I found you a Three White Soldiers Candle Pattern on the daily chart of 4R6.F.

4R6.F Daily Candlestick Chart
ASHIKA.BSE
8 minutes ago

I found you a Overbought RSI (Relative Strength Index) on the daily chart of ASHIKA.BSE.

ASHIKA.BSE Daily Candlestick Chart
PXH.F
9 minutes ago

I found you a Overbought RSI (Relative Strength Index) on the daily chart of PXH.F.

PXH.F Daily Candlestick Chart
PNE3.F
11 minutes ago

I found you a Oversold RSI (Relative Strength Index) on the daily chart of PNE3.F.

PNE3.F Daily Candlestick Chart
NTG.F
14 minutes ago

I found you a STOCH Bearish Hidden Divergence on the daily chart of NTG.F.

NTG.F Daily Candlestick Chart
NEN.F
17 minutes ago

I found you a Overbought RSI (Relative Strength Index) on the daily chart of NEN.F.

NEN.F Daily Candlestick Chart
NCGB.F
17 minutes ago

I found you a Three White Soldiers Candle Pattern on the daily chart of NCGB.F.

NCGB.F Daily Candlestick Chart
MSBA.F
20 minutes ago

I found you a Overbought RSI (Relative Strength Index) on the daily chart of MSBA.F.

MSBA.F Daily Candlestick Chart
M4M.F
22 minutes ago

I found you a Three White Soldiers Candle Pattern on the daily chart of M4M.F.

M4M.F Daily Candlestick Chart
LM06.F
24 minutes ago

I found you a RSI Bullish Reversal Divergence on the daily chart of LM06.F.

LM06.F Daily Candlestick Chart
LF9.F
24 minutes ago

I found you a MACD Bearish Reversal Divergence on the daily chart of LF9.F.

LF9.F Daily Candlestick Chart
LDE.F
24 minutes ago

I found you a STOCH Bearish Hidden Divergence on the daily chart of LDE.F.

LDE.F Daily Candlestick Chart
IV8.F
28 minutes ago

I found you a Oversold RSI (Relative Strength Index) on the daily chart of IV8.F.

IV8.F Daily Candlestick Chart
IJCA.F
29 minutes ago

I found you a RSI Bullish Reversal Divergence on the daily chart of IJCA.F.

IJCA.F Daily Candlestick Chart
CDOU.XETRA
30 minutes ago

I found you a Golden Cross on the daily chart of CDOU.XETRA.

CDOU.XETRA Daily Candlestick Chart
I3F.F
31 minutes ago

I found you a RSI Bullish Reversal Divergence on the daily chart of I3F.F.

I3F.F Daily Candlestick Chart
HINDCOPPER.BSE
42 minutes ago

I found you a Death Cross on the daily chart of HINDCOPPER.BSE.

HINDCOPPER.BSE Daily Candlestick Chart
HESTERBIO.BSE
43 minutes ago

I found you a Oversold RSI (Relative Strength Index) on the daily chart of HESTERBIO.BSE.

HESTERBIO.BSE Daily Candlestick Chart
HERANBA.BSE
43 minutes ago

I found you a STOCH Bearish Hidden Divergence on the daily chart of HERANBA.BSE.

HERANBA.BSE Daily Candlestick Chart
GVFILM.BSE
44 minutes ago

I found you a STOCH Bullish Reversal Divergence on the daily chart of GVFILM.BSE.

GVFILM.BSE Daily Candlestick Chart
WA8.AU
44 minutes ago

I found you a RSI Bullish Reversal Divergence on the daily chart of WA8.AU.

WA8.AU Daily Candlestick Chart
VIT.AU
44 minutes ago

I found you a STOCH Bearish Hidden Divergence on the daily chart of VIT.AU.

VIT.AU Daily Candlestick Chart
LUXOR-B.CO
45 minutes ago

I found you a Oversold RSI (Relative Strength Index) on the daily chart of LUXOR-B.CO.

LUXOR-B.CO Daily Candlestick Chart